Category Archives: mobility

Scholars Raj Chetty, Nathaniel Hedren, Patrick Kline and Emmanuel Saez (from Harvard and Berkeley) have garnered richly deserved attention for their interesting retrospective look at which places were the best in America for low-income kids to be born in 1980 and 1981 to assure the highest rates of youth mobility. [Amazingly, to do this, they were able to examine tax returns of all Americans and connect the youth with where they had grown up.]

[To explore the above map where blue areas are areas of highest mobility and red areas are areas of lowest mobility, visit the New York Times site.]

Their work rhymes with two pieces of research that we have done.

First, they find that the places that promoted the greatest level of mobility were places high in social capital. [For an image of social capital by state in the US c. 2000 see here.] This is less surprising, since other scholars have found that places with high social capital were among the places historically to invest in public high schools (e.g., Larry Katz and Claudia Goldin’s work on the birth of American public high school movement in the American heartland). Moreover, recent research by our research team, highlighted in Robert Putnam’s “Crumbling American Dreams” shows the changes in levels of community solidarity and togetherness, exemplified by the changes in his home town of Port Clinton, OH.

Second, they find that places with greater percentages of minorities were also places that afforded less social mobility for young people. This resonates with work of Ed Glaeser and Alberto Alesina on how it is harder to foster public investments in places of greater diversity (in the US and Europe) and work that we did in “E Pluribus Unum” that also discusses the short-term challenges of increased diversity.

One of our post-doctoral researchers, Jen Silva, has a very interesting op-Ed in Sunday’s New York Times that comes out of her research talking to young people in Lowell, MA and Richmond, VA about the challenges for working-class youth today.

Snippet:

In a working-class neighborhood in Lowell, Mass., in early 2009, I sat across the table from Diana, then 24, in the kitchen of her mother’s house. Diana had planned to graduate from college, marry, buy a home in the suburbs and have kids, a dog and a cat by the time she was 30. But she had recently dropped out of a nearby private university after two years of study and with nearly $80,000 in student loans. Now she worked at Dunkin’ Donuts.

‘With college,’ she explained, ‘I would have had to wait five years to get a degree, and once I get that, who knows if I will be working and if I would find something I wanted to do. I don’t want to be a cop or anything. I don’t know what to do with it. My manager says some people are born to make coffee, and I guess I was born to make coffee.’

Young working-class men and women like Diana are trying to figure out what it means to be an adult in a world of disappearing jobs, soaring education costs and shrinking social support networks. Today, only 20 percent of men and women between 18 and 29 are married. They live at home longer, spend more years in college, change jobs more frequently and start families later.

For more affluent young adults, this may look a lot like freedom. But for the hundred-some working-class 20- and 30-somethings I interviewed between 2008 and 2010 in Lowell and Richmond, Va., at gas stations, fast-food chains, community colleges and temp agencies, the view is very different.

Lowell and Richmond embody many of the structural forces, like deindustrialization and declining blue-collar jobs, that frame working-class young people’s attempts to come of age in America today. The economic hardships of these men and women, both white and black, have been well documented. But often overlooked are what the sociologists Richard Sennett and Jonathan Cobb in 1972 called their ‘hidden injuries’ - the difficult-to-measure social costs borne by working-class youths as they struggle to forge stable and meaningful adult lives.

The stories of young people growing up today from different walks of life will figure prominent in our forthcoming book on the growing youth opportunity gap in the US.

There is a section in Bowling Alone on how homeowners are more involved civicly than renters. Barry Bluestone, Dean of the School of Public Policy and Urban Affairs, at Northeastern University, was speaking to the Harvard Kennedy School Inequality Program today on “Is Homeownership Now Just a Dream?” Among discussions of who benefits from homeownership, he discussed whether we should support it and raised the issue of whether homeowners are better citizens, and if so, is it just due to their longer tenure in neighborhoods. Excerpt from his draft paper:

“To test the assertions made in the literature, we conducted our own analysis using data collected through the National Survey of Families and Households (NSFH) fielded in 2001/2002….In our analysis of the NSFH data, it was possible to investigate the impact of homeownership on a range of factors including the respondent’s optimism about their own life circumstances; on church attendance; on getting together with neighbors; on participation in group recreational activities; on the time they spend in local sports, hobby and discussion groups; and in the number of times they participate in the activities of local service clubs, fraternal organizations and political groups…. Essentially, this [our] analysis asks the following question: if renters had the same income, age, education, and residential tenure as homeowners, would they be as optimistic about their own lives and be as civically-engaged as exisitng homeowners? Again, is there any benefit to homeownership per se? The results of this new analysis point to a number of individual and social benefits that accrue to homeowners even when compared to renters who have lived in the same place for nearly ten years and have equivalent social-economic status (SES) – income, education, and age. On the one hand, the analysis finds no difference between homeowners and renters in church attendance, in getting together with friends, or in participating in group recreational activities. On the other, homeowners tend to be more optimistic about their own futures, they participate more often in local sports and discussion groups, and most importantly they are more civically engaged in service organizations, fraternal groups, and political organizations… Before controlling for housing tenure and SES, 48.3% of homeowners report that they participated in sports, hobby, or discussion groups at least once a year; only 37.9% of renters reported such. After controlling for these factors, the probability of renters participating in these activities increases to 39.8%. Hence, homeownership per se appears to boost such participation by 8.5 percentage points or by more than 21 percent. Before controlling for housing tensure and SES, 37.5% of homeowners but only 27.2% of renters responded that they participated at least once a year in service clubs, fraternal organizations, or political groups. After controlling for tenure and SES, renter participation appears to increase to 31.5%, still 6 percentage points less than homeowners. That is, homeowners are 19 percent more likely to be active in these groups.

Bluestone seems sympathetic to homeownership. His analysis is interesting but despite his effort to be “fair”, he likely overcontrols since he makes the highly unlikely assumption that one could have considerable number of renters with the same tenure as homeowners. One thing that Bluestone didn’t examine is how renters and buyers differ in their future intentions of rootedness and geographic mobility: only 25% of homeowners, when we conducted research for Bowling Alone, expected to move in the next five years versus two-thirds of renters. If we had policies in America that left us with far more renters, it seems wishful thinking to imagine that most of them would remain in community for as long as the owners. And thus even on the measures where Bluestone doesn’t find that homeownership is associated with higher levels of engagement after his demographic controls (namely, socializing and church attendance), homownership probably really is still associated with higher socializing and church attendance. Homeownership works to increase rootedness (partly psychologically and partly financially) and this rootedness increases socializing and church attendance.

Bluestone also relayed an interesting and telling anecdote about his hometown of Detroit. Albert Cobo (Mayor of Detroit in the early 1950s) used the power of eminent domain to raze a poor community in downtown Detroit to prepare for highway expansion that never occurred. After the highway fell through, African-Americans’ hopes that the razed area would soon be rebuilt, the suburbs of Detroit were developed, but the area razed by Cobo remained vacant. Eventually the UAW developed a significant tract of housing in the razed area but insisted that all the homes be rental units. Edison developed a community across the street, even hiring the same architect to give the other community the same look and feel. Bluestone notes that while these areas (the UAW rental tract and the Edison ownership tract) attracted similar residents, the Edison (home-owned) units have remained in much better condition as the owners have worked to preserve their investments and volunteered for neighborhood groups that preserved the more general environment. My guess, although Bluestone didn’t say this, is that residential tenure was also much longer in the Edison ownership tract than in the UAW rental one.

Rana Foroohar’s cover story in TIME (Nov. 2011) is entitled What Ever Happened to Upward Mobility? Her answer is that it has stalled in the US and fallen behind rates of upward mobility in the US, Sweden or Denmark. According to Foroohar (and based on a Pew study), a male born in the 1970s into the bottom fifth of the wealth distribution had only a 17% chance of making it to the top wealth quintile. And while 50% of young males in this low-wealth quintile remained stuck there in the US, it was only 30% in UK or 25% in Denmark and Sweden, so upward mobility was much higher in those nations. [Swedish economist Markus Jantti led the research project that uncovered these numbers.]

Foroohar (after consulting experts from places like Goldman Sachs) says that China and other emerging countries are driving inequality by taking away good middle class US jobs. Foroohar believes that the answer lies in more progressive tax rates (with fewer loopholes) and greater investments in public education (which is the engine of economic mobility).

We have been doing work on the connection between income inequality and social inequality among youth (that exacerbates the test score gaps) and will report on that later, but suffice it say that we find a connection between the “blue inequality” (income inequality) and “red inequality” (the ability of college graduates to pass on advantages from a generation to another) that David Brooks writes about.

In November 2011, a variety of non-profit, corporate, academic and media leaders convened to discuss social mobility in the Opportunity Nation summit. Opportunity Nation has released an Opportunity Index that enables you look state by state or county by county to see how that locality is doing in terms of economic opportunity. And you can see videos of some of the speakers here. Rick Warren cited an eye-opening statistic: 25% of Anglo kids, 50% of Hispanic kids, & 75% of black kids are growing up today without a stable father in the home (these are out of wedlock births). This work is picked up in Charles Murray’s Coming Apart and in Nick Kristoff’s “The White Underclass“.

The Economic Mobility Project/Brookings analyses break the parent and child generations into fifths on the basis of each generation’s income distribution. If being raised in the bottom fifth were not a disadvantage and socioeconomic outcomes were random, we would expect to see 20 percent of Americans who started in the bottom fifth remain there as adults, while 20 percent would end up in each of the other fifths. Instead, about 40 percent are unable to escape the bottom fifth. This trend holds true for other measures of mobility: About 40 percent of men will end up in low-skill work if their fathers had similar jobs, and about 40 percent will end up in the bottom fifth of family wealth (as opposed to income) if that’s where their parents were.

Is 40 percent a good or a bad number? On first reflection, it may seem impressive that 60 percent of those starting out in the bottom make it out. But most of them do not make it far out. Only a third make it to the top three fifths. Whether this is a level of upward mobility with which we should be satisfied is a question usefully approached by way of the following thought experiment: If you’re reading this essay, chances are pretty good that your household income puts you in one of the top two fifths, or that you can expect to be there at age 40. (We’re talking about roughly $90,000 for an entire household.) How would you feel about your child’s having only a 17 percent chance of achieving the equivalent status as an adult? That’s how many kids with parents in the bottom fifth around 1970 made it to the top two-fifths by the early 2000s. In fact, if the last generation is any guide, your child growing up in the top two-fifths today will have a 60 percent chance of being in the top two fifths as an adult. That’s the impact of picking the right parents — increasing the chances of ending up middle- to upper-middle class by a factor of three or four.

Two of most startling charts of testimony were one by CBO showing how the income of the top 1% is the one cohort that has done well over the last 40 years in the US economy:

And one showing that, unlike in most countries where progressive taxation is used to curb the excessive inequalities of the market and ease the distribution somewhat, the tax and transfer system in the US actually make inequality WORSE.

George W.’s speechwriter has an Op-Ed noting that we should focus more on economic mobility than economic inequality and we couldn’t agree more:

Excerpt:

“Still, the most important measure of U.S. economic success is not income equality but social mobility. Economic inequality can be justified in a fluid society, in which economic advancement is a realistic goal. Economic inequality in the absence of economic mobility amounts to a class system in which the circumstances of birth are the main economic blessing or curse….

“There remains a considerable amount of economic mobility, upward and downward, in the middle class. But nearer the bottom of the income scale, upward mobility is weak and stuck. As a result, according to the Economic Mobility Project, the U.S. economy is less fluid than the economies of Canada, France, Germany or the Scandinavian countries.”Individual advancement is closely tied to educational achievement and family structure. An economy that rewards skills and other forms of human capital is not a good place to be a dropout with a child out of wedlock.

“Conservatives are correct that tax increases on the wealthy to fund entitlement commitments that go mainly to the elderly would do precious little to address this problem.

“Liberals are right that a combination of rising economic inequality (even if the rise is gradual) with stalled economic mobility is an invitation to destructive social resentments. Americans will accept unequal economic outcomes in a fair system. They object when the results seem rigged. That way lies the Bastille.

“So the question comes to liberals and conservatives: If social mobility is the goal, what are the solutions? What can be done to improve the quality of teachers in failing schools, to confront the high school dropout crisis, to encourage college attendance and completion, to reduce teen pregnancy, to encourage stable marriages, to promote financial literacy, to spark entrepreneurship?

“Both Democrats and Republicans should have something to contribute to the development of this agenda. Neither party, however, currently has much to say. And this is not likely to change until the discussion turns from equality to mobility.”

Their research, based on the Current Population Survey (CPS), specifically compared levels of “social capital” in 2006 (using measures like volunteering, attendance at public meetings, helping neighbors, voting and registering to vote) with the rise in unemployment from 2006-2010 at the state level.

In the attached representative chart the states are color-coded by the growth in unemployment from 2006-2010. States experiencing the highest growth in unemployment are orange and red for highest growth. The horizontal axis measures the % of residents who worked with their neighbors in 2006. One can see that states experiencing the biggest growth in unemployment were the least “civic” states.

They admitted that this correlation doesn’t prove that social capital CAUSED the lower run-up in unemployment but it is a strong circumstantial case. Seeing an early draft of these findings, we suspected that it was the strong economic growth rate in some states that drove a lot of in-migration which in turn lowered social capital (since uprooting is as bad for social capital as it is for plants). If that were the story, and the current Great Recession was worst in the places that experienced the biggest economic booms pre-recession, then these pre-recession booms could be causing both lower social capital (working through mobility) and the higher run-up in unemployment when the state economy crashed. But Levine and Dietz controlled for factors like the housing bubble pre-recession, residential mobility, and other predictors of state unemployment and their findings remained.

A colleague of ours, Chaeyoon Lim, at the University of Wisconsin has been undertaking related interesting unpublished research on this topic and so far finding consistent and robust findings. Based on the Dietz/Levine findings and Lim’s unpublished findings, our hunch is that this finding might very well be real.

Assuming this finding turns out to be real, one might wonder about the mechanisms. My hunch of the most likely culprit is that in higher social capital places, firms are more likely to share the pain through across-the-board cutback in hours rather than concentrate the pain through layoffs and firings. Levine and Dietz posit other explanatory factors:

stronger social networks make it easier for people to get re-employed;

Robert Putnam was on the NewsHour yesterday in a story by Paul Solman on how inequality and decreasing economic mobility are affecting Americans even as the economy modestly recovers out of the Great Recession.

Excerpt:

PAUL SOLMAN: So, the American dream — your kids will do better than you — neither you nor your kids think that that`s the case?

COOKIE SHEERS: No, we all feel stuck in a rut. You feel like you can`t move, you can’t grow, like you’re just at that edge of water where you can come up for air every few minutes, but never long enough to feel that you have accomplished something. You always have to go back down.

BOBBY HICKS: Like she says, I feel like, once I feel like I have reached that part where my nostrils can come out the top, life comes back and just steps right on my face and says: You know what? It’s not time for you to come up for air yet.

PAUL SOLMAN: The numbers support the stories. Economic inequality in America, widening steadily since 1980, grew during the financial crisis, with the top 5 percent of Americans owning 65 percent of national wealth by mid-2009, up from 62 percent two years before. The losers were the bottom 80 percent, whose share of wealth fell during the crisis. Nearly half had negative net worth by mid-2009….But, at least historically, there was always the very real hope of moving up, at least across generations.

ROBERT PUTNAM, Harvard University: That isn’t true anymore….So, one of our competitive advantages as a — as a society, which used to be that we were very mobile, and we were constantly getting new infusions of talent and so on at the top, and — and that people down near the bottom had a hope that, if they didn’t do well, their kids could do well in the past in America.

That a poor kid could grow up in a tenement, go off to city college, do well, and himself end up in the next generation pretty well-off, that’s what’s becoming less likely in America. And I think that undermines a crucial part of the American myth or the American dream or the American social contract.

PAUL SOLMAN: Adds economist Sam Bowles:

SAMUEL BOWLES, Santa Fe Institute: America is distinct in the extent to which inequality is inherited from generation to generation. The kids of rich parents have a strong tendency to be rich, and the kids of poor parents are very, very likely to be poor. That’s one of the things which I think Americans find most shocking. That’s a huge discrepancy from what we think of as the land of opportunity.

Even a college-education, the key ingredient in economic mobility, doesn’t seem to immunize Americans from these economic problems:

DENISE BARRANT: In our family, everybody is college-educated. Most of us have masters’. Myself, I’m unemployed. My brother is unemployed. People used to think it was a guarantee. It is not. To invest $200,000- plus in an education, with no guarantee that you have a job, is scary.

PAUL SOLMAN: As for Bobby Hicks’ job, it’s inequality, he says, that makes it possible.

BOBBY HICKS: In the security industry, you know, there is a demand for jobs, because the rich want to protect their assets.

PAUL SOLMAN: But those jobs are low-pay and low-prestige, despite the high stakes.

BOBBY HICKS: A pressure release valve for the domestic water in the building broke. And there was water flooding, and this was on the sixth floor. If their servers got wet, it would have wiped out the entire East Coast for this one particular company — and Bob, $9 an hour, to the rescue. Make the call, count on you, all right? But, if I screwed up, you’re gone.

Note: the story is factually incorrect in claiming that Robert Putnam helped run Harvard’s Inequality Program. He has never done that and Bruce Western runs Harvard’s Inequality Project currently, but Harvard’s Kennedy School Saguaro Seminar which Putnam leads has been undertaking a 4-5 year investigation of a growing youth social class gap.